Will you be getting your foot on the property ladder this year with a first-time buyer mortgage?
Recent figures from Halifax suggest there were record numbers of first-time buyers entering the market last year. But why? And what does it mean for you? We’re taking a look.
First-time buyer surge in the market
Since the re-start of the market following COVID measurements, we know that people have been re-evaluating their living spaces having been cooped up for months.
Despite the reported rising house prices and falling affordability, 400,000 people have been able to buy their own homes in 2021 as first-time buyers. That’s a 35% increase from 2020.
It means that first-time buyers accounted for half of the house purchases last year.
Rising house prices haven’t deterred buyers, even as the average house price in the UK is £270,708 (since November 2021).
Figures also show that the average buyer used a £53,935 deposit on a first property costing £264,140.
Factors affecting the first time buyer boom on the market
Varying factors contributed to this but with stamp duty holidays starting in 2020 many people took advantage and moved up the ladder bringing ‘first rung’ homes back on the market.
Fundamentally there are 4 influential housing market factors that contribute to a buyers market?
- Supply & Demand. As perhaps the most basic concept of economics, supply and demand will dictate the direction of the housing market.
- Interest Rates
- Availability of Funds
- The Stock Market
So what’s caused the first time buyer surge in the market?
Well, as we said it comes down to a range of varying factors that have further supported first-time buyers to get on the market:
- Stamp duty relief
- Low borrowing costs
- Government-backed guarantee schemes
Are you a first-time buyer?
Not sure what a first-time buyer is or qualifies as?
The dictionary definition of a first time buyer is ‘someone who is buying their own house or apartment for the first time, especially by borrowing money from a bank or similar organization.’
This is further supported by the Government’s guidelines on what is first-time buyer if you are trying to qualify for one of their support schemes. They define it as having never owned a property anywhere in the world, shared ownership properties with housing associations, properties jointly owned with someone else at some point in your past and even caravans.
How to get on the property ladder as a first-time buyer
There are a number of supported ways to get onto the market now.
The first time buyers scheme or help to buy schemes operated through the government can offer support through:
Equity Loan – the scheme offers a government loan for a 20% equity share (until the loan is re-paid) on top of your 5% deposit.
Shared Ownership – offers you the chance to buy a home if you can’t afford to buy 100% of it. It simply means that you purchase a proportion of the property, between 10% and 75%, and pay rent on the rest.
Mortgage Guarantee – the government is providing lenders (who are signed up to the scheme) with a 20% guarantee on mortgages where the borrower has a 5% deposit.
Lifetime ISA – allows you to save and earn a government boost of 25% of those savings for use to buy a home or for later in life.
Right to Buy – The scheme offers a discount on your property of up to £84,600 outside London and £112,800 in London.
Help to Build – currently being finalised the government are setting it up to help remove the barriers and make self build homes an affordable realistic option.
First Homes – aimed at local first-time buyers and keyworkers, so those who are looking into owning their own home in the locality of where they live and work.
You can read more about the schemes in our Help to Buy Schemes article and First Homes article.
More information is also available on the Own Your Home website.
Is now a good time to get onto the property ladder?
Whilst there is no denying the rise in house prices, mortgage rates are still low with the Bank of England’s base rate currently set at 0.50%.
The offer of Government-backed help to buy schemes as mentioned above can potentially help you onto the market.
So what’s the best course of action?
Well, that depends on your circumstances. Speaking to an experienced mortgage adviser can help you understand what your options are and what would be available to you.
You can read more about becoming a first-time buyer in our first-time buyer’s mortgage guide.
We always recommend gaining advice from a mortgage advisor before applying for a mortgage so you can understand the deposit required for the mortgage best suited to you.
The Online Mortgage Guru is also a specialist mortgage brokerage. We match lenders to our clients based on their personal circumstances. We are a whole of market brokerage, so we have access to high street lenders right through to specialist lenders.
Rather than trawling the high street and agonising over your choice, you could save time and potentially a large amount of money.
Our expert mortgage advisors have helped many people in getting their first-time buyer mortgage secured. Depending on your circumstances we will talk you through anything you’re unsure of and recommend the best mortgage for you from the wide range of mortgages on the market for house movers, such as the lowest fixed-rate mortgages or base rate tracker mortgages.
Our advisors are available for callbacks to suit you.
Contact us at Online Mortgage Guru on 0345 3669799 or email us via info@theonlinemortgageguru.co.uk and we will put you in touch with a suitable specialist to handle your enquiry.
